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ESPN NY moving to FM but not WFME as speculated.

Looks like WFME still needs a buyer.
Click to expand...

Yeah, it does look like WFME still needs a buyer, but there was a curious statement yesterday from Merlin Media's CEO Randy Michaels, and he said that "WFME has not yet come on the market." He is in a good position to know since his company just bought the Family Radio station in Philly.

Possibly Family Radio wants to maximize its signal first, and see if it can move the transmitter to Manhattan, which would increase the station value.

On the other hand, with ESPN out of the picture, there are other possible formats for WFME that may not need to reach that sliver on Long Island that WFME doesn't and all the ESB signals do. The price of the station would just be adjusted for missing that small fraction of the market.

It would be nice to see a format aimed at New Jersey listeners, or a more suburban audience than what's coming out of NYC.

Here's wild speculation.....The second largest radio station owner in the country, Cumulus, has only one NYC FM, WPLJ.

It buys WFME, and moves the suburban soccer mom PLJ programming over to WFME since that signal reaches those mall shopping females of the desirable demos in the Jersey suburbs and Staten Island with a better signal than PLJ. Remember WPLJ does well in the Middlesex-Somerset-Union PPMs, and probably just as well in Bergen, suburban Essex etc.

That keeps the soccer mom advertising revenue from WPLJ flowing in, and gives Cumulus 95.5 to try a format that would bring a bigger market share in the entire NYC radio market.
 
My view is that an LMA is like a home foreclosure. It hurts home values in the neighborhood. Because it causes a potential buyer to think "Why buy when I can rent and get the exact same place? AND it takes a qualified buyer off the market, less competition for the license, thus lowering the price. Bad news for Family, who really needs the money, not an LMA.
 
Although its an LMA, Emmis apparently got a lump sum, just like it would have had it sold the station, of $75-million by using the station license as collateral for a new loan from an "insurance company." Certainly, the ESPN lease made that deal attractive since if Emmis defaulted the "insurance company" would own the station license with the ESPN lease money flowing in to pay the loan.

In total, this complicated KISS deal apparently brought Emmis about $100-million which it can use to pay down its $240-million in already outstanding debt.

Disney's desire for LMAs may have more to do with corporate taxes, or declining radio station values than anything else.

But, if ESPN had been interested in WFME the same kind of deal with an "insurance company" could have been done.

Much more on the financial details here:

http://www.thedeal.com/content/tmt/emmis-espn-ink-programming-deal.php
 
TimeIsTight said:
But, if ESPN had been interested in WFME the same kind of deal with an "insurance company" could have been done.
Click to expand...

Nope. Family is getting out of the radio business. Someone else would have had to buy the license and sub-lease to Disney.
 
Nope. Family is getting out of the radio business. Someone else would have had to buy the license and sub-lease to Disney.
Click to expand...

Even if it was otherwise getting out of radio, Family Radio could have kept WFME and leased it. Actually, Family probably would have preferred the kind of deal ESPN gave Emmis, because when the lease is up the station would still belong to Family. And, Family probably expects to exist in perpetuity.

But Family Radio isn't getting out of radio, it still owns stations and translators all over the country, mostly in the non-comm FM band, but also some AMs, and it also has a big shortwave facility in Florida that it continues to use to broadcast to the world.

In West Orange, Family Radio will continue to own WFME-TV which is currently co-located with the radio station.

So, if it did do an LMA for the FM, it would still have an office and engineering presence at its current site, if needed.

Family Radio just took on too much debt in the past few years as a result of Camping's delusion, and has been forced to sell its three big FM stations that are on commercial frequencies in DC, Philly, and New York. Family Radio will still be a going non-profit radio broadcaster after this, and if it could find a blue chip commercial broadcaster willing to sign a solid long-term lease and an "insurance company" willing to provide a sufficient lump sum, with that lease and the station license as collateral, Family Radio could pay off its debt, and be in a position to renegotiate the lease, or put its programming back on the station in 12 or 15 years.

In the Emmis deal, the reputation and credit worthiness of Disney on that lease certainly made the "insurance company" much more willing to provide the up front cash.
 
Emmis and the insurance company got a good deal thanks to ESPN. Emmis gets a $75 million loan (which is about as much cash it would get if it sold the station) and money from ESPN, which they wouldn't get if they sold the station outright to ESPN. As long as the ESPN money is greater than the interest on the loan, Emmis is better off. The insurance company gets the interest on the loan, and they have little risk since they get 98.7 (and the ESPN payments) if Emmis defaults. Then they can sell 98.7 to ESPN since it's unlikely an insurance company wants to be in the radio business.

As for Family Radio, they're not as trustworthy as Emmis, since the next time Harold Camping thinks the world will end, they'll stop paying their loan. I'm sure the process to sell 94.7 is going on right now, and we'll hear about who it'll be sold to one day out of the blue. Family Radio probably lost a large percentage of its revenue because they were wrong about the world ending and people would stop donating.
 
Nick, you've got it.

You may also be interested in knowing that Disney is paying $8.4-million for the first year of the lease. That works out to about $23,000 in rent a day just to use the license. The cost of the lease will go up by 3.5% each year, and end on August 31, 2024. And all that money will just go to pay off the "insurance company."

More details here:

http://www.radioink.com/Article.asp?id=2443913&spid=24698
 
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